APAC's next cycle: AI, ETFs and alternatives reshape investor playbooks
AsianInvestor (AI): What are APAC clients asking for now, and what has changed versus five years ago?
Dan Watkins (DW): The biggest shift is that volatility is increasingly being treated as structural rather than episodic. Performance is still the north star, but investors are more explicit about how they want outcomes delivered.
They want portfolio solutions aligned to income, diversification and risk goals, delivered with transparency and efficient access. That is supporting growth in ETFs, including active ETFs, and it is also driving expanding demand for alternatives and private markets.
At the same time, distribution is changing investor behaviour. More flows are routed through a smaller number of platforms, model portfolios and discretionary mandates. Those ecosystems increasingly set expectations around portfolio roles, reporting, speed of implementation and the overall service experience.
And next-generation investors are engaging earlier and more digitally, which raises the bar on personalisation and transparency.
AI: How should asset managers evolve to capture the change in investor preferences?
DW: Asset managers need to evolve from product providers to solution partners that add value for investors.
It starts with staying curious about how clients are allocating, where decisions are being made and what good implementation looks like in each market. Then you need to stay close enough to respond quickly as those needs shift.
Practically, that means deeper end-to-end understanding of clients, more systematic training for advisors and partners, and targeted events and thought leadership that are designed for how investment decisions are actually taken. It also means partnership-led product development, including co-creation with key distributors, because that is often how you build relevance and stickiness in portfolios.
The differentiator is execution. Being embedded in key distribution ecosystems, with market-relevant structures and strong servicing, is increasingly important. Solutions must prove they work in portfolios, not just in presentations.
AI: What’s driving APAC investors to increase exposure to private markets?
DW: Put simply, diversification. As stocks and bonds have become more correlated, investors are looking for additional sources of return and income. Alternatives are increasingly viewed as core portfolio components, not just a nice to have.
The shift is most visible in the private wealth community. Institutional investors and ultra-high-net-worth individuals already have higher allocations, and high-net-worth clients are catching up. In response, we are offering multiple entry points, including evergreens, closed-ended funds, co-investments and feeder structures.
Evergreens, in particular, address longstanding private wealth concerns around liquidity mismatch. They typically provide periodic subscription and redemption features, while still recognising the underlying liquidity profile of private assets. We take a deliberate approach to product development and recently launched our J-series of evergreen funds, starting with a private equity strategy. We plan to continue expanding investor access to evergreen vehicles across private markets going forward.
AI: Active ETFs are gaining momentum. What needs to happen for APAC adoption to deepen?
DW: Three things. Firstly, investor education and clarity on portfolio roles. Active ETFs need to be understood as portfolio building blocks, supported by the right liquidity, product breadth and distribution.
Secondly, deeper product line-ups, particularly in fixed income, alongside continued market infrastructure development, so trading and implementation remain reliable across different market conditions.
Thirdly, regulatory support. APAC is a fragmented landscape for ETFs and adoption is uneven across markets. More consistent and supportive frameworks would help accelerate broader uptake.
The growth opportunity is clear. As of end-March 2026, active ETFs are still only around 10% of total ETF AUM globally, but they account for about 38% of flows. In APAC, active ETFs represent about 5% of total ETF AUM, which suggests meaningful room to grow.
AI: AI is on every CEO’s agenda. How is it transforming asset management, and what will distinguish the winners?
DW: Over the last couple of years, a lot of organisations tested AI broadly. Now the focus is narrowing to the use cases where value is measurable and workflow impact is meaningful.
We are moving from AI experimentation to selective adoption, concentrating on areas like investment research workflows, client servicing and reporting.
AI can help us operate more efficiently and be better informed, but human expertise remains essential for judgement, risk management and fiduciary outcomes. In other words, AI can take on the “no joy” tasks, but it does not outsource accountability.
AI also introduces new responsibilities: ensuring outputs are accurate and reliable, maintaining governance and oversight, and managing risks in a regulated environment. We support innovation, but we also believe the bar on governance and accountability needs to rise as adoption expands.
Staying adaptable without losing discipline
Ultimately, while the investor playbook in APAC is changing fast, Watkins doesn’t believe the response should be constant reinvention. The priority, he says, is to build an “all-weather” approach: stay close to clients, execute consistently and adapt tactically without losing strategic discipline.
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